Oil fell today as concern eased about the threat to production in the Gulf of Mexico from Tropical Storm Alex, offsetting any support from a report showing US consumer spending rose more than expected in May.
US crude prices fell back after reaching an almost eight-week high above $79 earlier in the session, having settled at a seven-week high on Friday when prices jumped more than 3% on concerns tropical weather would disrupt supply.
Over the weekend, Alex became the first named storm of the 2010 Atlantic hurricane season. Forecasters, expecting an active season, said Alex could become a hurricane tomorrow.
Late this afternoon, US crude for August was down 88 cents at $77.98 a barrel. It earlier rose to $79.38, the highest intraday price since May 6.
August Brent crude was down 73 cents at $77.39.
The US National Oceanic and Atmospheric Administration forecasts 14 to 23 named storms for this year's season, with eight to 14 developing into hurricanes. Three to seven of those could be major Category 3 or above hurricanes.
Mexico closed two of its main Gulf of Mexico oil exporting terminals yesterday as Alex moved over the Yucatan peninsula, the government said. The ports of Cayo Arcas and Dos Bocas typically handle combined exports of more than 1.1 million barrels per day (bpd), or about 80% of Mexico's shipments abroad, which mainly head to US refineries.
Shell Oil shut subsea production at two platforms, and BP evacuated some personnel from three Gulf of Mexico platforms, the companies said yesterday.
